2.57pm: The fact that Greece’s draft agreement for the second bailout is being translated into Greek for the benefit of George Karatzaferis (see 1.08pm) is encouraging, for two reasons

1) It suggests that we really are close to a deal — otherwise why go to the effort of a translation?

2) It means (as reader Yiannis Mouzakis points out on Twitter), that Karatzaferis and his fellow party leaders will read the agreement. Eyebrows were raised last month when development minister Michalis Chrysochoidis admitted that he didn’t read the terms of Greece’s first bailout package.

2.25pm: A clarification on the number of people who attended today’s demonstrations in Athens. According to the Associated Press, the police now estimate that around 10,000 people took part in the march to Parliament organised by Greece’s two biggest labor unions.

That is seperate from the demonstration organised by the communist party, which attracted a further 10,000 unionists, despite the rain in Athens.

No arrests or injuries were reported and the clashes quickly subsided.

2.00pm: Here’s a lunchtime round-up.

• Greek has been gripped by a general strike today, in protest at the prospect of further austerity in return for a second bailout package. Police estimate that 10,000 people braved pouring rain in Athens to march. The protests were largely non-violent, with marchers congregating at the Athens parliament and calling for MPs to resign.

• A German flag was burned during the protests. See pictures and video here.

• Citi warned that there is now a 50% chance of Greece exiting the euro soon. A Grexit is now a real danger, it warned.

1.35pm: The euro has rallied in the last few minutes following reports that a draft bailout agreement is being prepared for tonight’s meeting (see 1.09pm for more details). It just hit .3167, its highest point of the day.

The feeling in the market is, even if tonight’s meeting is delayed, that doesn’t matter if it yields that all-important deal. But having a draft agreement is one thing — can Lucas Papademos persuade George Papandreou, Antonis Samaras and George Karatzaferis to sign it?

All three leaders are aware that the painful austerity measures demanded by the Troika are deeply unpopular with the electorate — and a general election is probably only a few months away.

1.08pm: Just in — the meeting between Lucas Papademos and the leaders of the three Greek parliamentary parties has been pushed back, and will not start until 9pm Greek time (7pm GMT).

According to a senior government source, the latest delay is caused by the need to translate the draft agreement into Greek, so that George Karatzaferis, leader of the far-right LAOS party, can read it. Apparent Karatzaferis’s English isn’t up to the task*.

The senior government source also told Helena Smith that the talks could last for several hours, even until 3am if needed. The message is clear – we’re not getting a decision tonight.

As a reminder, this meeting is being called by PM Lucas Papademos to get agreement on the terms forr Greece’s second bailout, worth €130bn.

* – unlike George Papademos and Antonis Samaras, who both studied in America.

12.59pm: Athens police say that 10,000 people took part in today’s protests. If so, that’s smaller than the biggest strikes seen since the financial crisis mention.

Helena Smith comments:

Strikes and protests have, like so much else in Greece, become a bit of a luxury. Public and private sector workers lose a day’s pay every time they participate in industrial action – money that many cannot afford to do without.

Turnout may also have been lower because of the poor weather in Athens, where it’s chucking it down.

It was taken outside the Athens parliament this morning, where other protesters also chanted slogans against further job cuts, and called on Greek MPs to resign. “Democracy here and now”, they said.

12.13pm: There are reports from Athens that protestors attempted to burn a German flag during today’s protests.

This video, via www.keeptalkinggreece.com, does show a group trying to light the German black, red, and gold tricolour, and what appears to be a swastika, but with limited success – perhaps because it was so wet in Athens today.

It’s a worrying sign, as Matina Stevis of Dow Jones and the Wall Street Journal tweeted:

My timeline says a German flag has been set alight outside the Greek parliament. This is what it’s come to? Very sad. #Greece#euro#Germany

Helena Smith confirms that Syntagma Square has been cleared in the last 20 minutes, with some reports from the scene that riot police used tear gas.

12.00pm: Another report from the streets of Athens from Helena, who has found some support for Lucas Papademos:

Just bumped into cobbler Stathis Asimakopoulos who has a store in central Athens. He says the problem with Greece is that it is run “by a bunch of monkeys”, who should have started reforming the economy 30 years ago.

Asimakopoulos told Helena that Papademos is a serious person, who the Greek people should support. He, though, is considering emigrating:

Athens correspondent Helena Smith has also hit the pavements to interview the marchers.

Nikos Zeppos, a pensioner armed with an umbrella to ward off the showers, predicted that the latest austerity measures would provoke more people to protest against austerity. Zeppos said:

The battle is maturing. The big bang is coming. With these latest messages people will wake up. Our numbers will grow…..It’s just a matter of spark, some small reason before it happens.

After a 42-year career working a bank, Zeppos’s pension has gone down from €2,500 per month to €1,300 euro.

It sounds like a lot but I have to support my daughter who has been laid off from her job as a teacher and she has two children. So that money is supporting two families and it’s impossible to survive.

11.45am: Here’s a picture of the march organised this morning by the Communist-affiliated trade union PAME.

It appears that the protest was well-supported, and also peaceful.

11.36am: Peter Close, a businessman in Greece, takes a pragmatic view of today’s strikes. He writes:

Strikes in Athens have become so regular and frequent over the past two years that most businessmen have simply become accustomed to altering their lives so that the stoppages cause them as little inconvenience as possible. In England, you have an abundance of cloudy and rainy days and comparatively few really sunny days. In England, you have learned to live with your bad weather. In Greece, we have learned to live with our strikes.

As UK readers will know, there’s no escape from the weather. Peter continues:

The Greeks are more fortunate than the English are though because there may come a time in the future when strikes in Greece will become seldom or cease, but the English are likely to have to live with their weather for eternity.

Only a cynic would suggest that global warming might improve the British climate before Greece agrees a deal with its creditors. And actually, it’s quite sunny in London right now #can’tlast

Another reader James Wilkins, writes:

As an Englishman living in Greece I have followed the crisis closely. The only policy the “political class” in Athens, but also Brussels, have put into effect until now is to screw the poor, because this is the easiest thing to do. If the politicians in Athens, and also in Brussels, would take a 50% hair cut on their income they would still be well off, and ordinary, yes, hardworking Greeks might be prepared to accept the medicine that is offered them. As it is, everyone in Greece knows that the sole interest of the present politicians in Athens ( and also Paris and Berlin) is to stay in power.

James predicts that Greece will polarise between left and right-wing parties after the next election, and become increasingly unstable. That could even threaten the stability of the whole region, he adds:

I am a middle of the road kind of person but I understand the anger that ordinary, yes, hard working Greeks feel. Their only wish is to get rid of the present set of politicians.

11.26am: Word of the day: ‘Grexit’.

That’s the term dreamed up by Willem Buiter, chief economist at Citigroup, who now fears that a Greek exit from the eurozone is a greater risk.

Buiter now reckons there is a 50% chance of a Grexit over the next 18 months, up from Citi’s previous estimate of just 25-30%.

On the upside they argue that the costs of Grexit to the rest of the euro area would be “moderate”, as they “expect post-Grexit fear contagion would be contained by policy action, if needed.”

But the fact the damage would be lighter makes such a Grexit more likely. And with Greece currently struggling to secure reform pledges from its public sector and its wider population, willingness to help has diminished somewhat.

11.06am: Germany has suffered its biggest fall in industrial output in three years, surprising City analysts.

The German finance ministry has just reported that industial output across the country dropped by 2.9% in December compared with the previous month — defying expectations that output would fall by just 0.3%.

Although November’s industrial output was revised higher, the data still suggests that the powerhouse German economy might not be quite as immune to the global slowdown as we thought.

Looking at the data, German construction suffered the biggest fall (-6.4% month on month), but there was also a dropoff in output of capital goods [physical items such as factory equipment], which fell by 3.6%.

10.55am: One bit of positive news for Greece — it got a debt auction away this morning. Greece sold €812.5m of six-month bills at an average yield (the effective interest rate on the debt) or 4.86%. Slightly down on 4.9% at the last auction of this kind.

It’s no surprise to see a debt auction going well, as the ‘liquidity rally’ sparked by the European Central Bank’s splurge of cheap loans continues.

10.28am: As if Greece didn’t have enough problems – its gas supply from Turkey has been turned off.

The shut-off is being blamed on a “technical problem”, rather than concern over Greece’s financial state. More as we get it…

10.18am: Another reader, Jacqui, says there is a “renewed energy” to get into the centre of Athens and protest.

The news yesterday of the public sector sackings going ahead caused so much anger that people even protested in the rain last night; this is remarkable as Greeks just do not go out when it is raining.

People are telling me in the shops that they believe the Greek leaders have already made a decision to abandon the debts and are simply not telling us.

Jacqui adds that many people are taking the daily limit from ATM machines each day, leading to criminal gangs preying on customers as they leave their banks:

My elderly neighbour was followed home by two men and attacked in her foyer, knocked down and robbed of her savings, I saw them ride off on an unregistered motorbike when I came out to her screams.

In conclusion, she fears that wide-scale civil unrest is close:

The Greek people have been quietly and patiently waiting for a deal and every week has brought further stress and disappointment, it has to bubble over soon. The television has a segment each night called ‘Crisis Drama’ where they interview the people huddled in their lovely apartments without money for heating oil, you see the plump wealthy ladies bringing food bags to young couples, always the recipients faces are obscured because of the shame.

10.10am: Many thanks to all of you who have got in touch regarding the situation in Greece today.

Trolleys are running, as is the electriko line from kiffissia to Piraeus. So you can get about Athens ok. No ferries though.

Coastguard officials have confirmed that no ships left Piraeus port in Athens this morning, due to a strike by seamen at the port.

Constantina Braoudaki emails in from Greece’s largest island to confirm that the strikes are having an impact there:

Writing from Crete- strikes here ! Five out of six school periods canceled!

9.47am: An update on the general strike in Greece from Helena Smith:

Communist party diehards are gathering in Athens. Mass demonstrations are expected to take place in the coming hours. Nikos Sofianos, who sits on the central committee of Greece’s communist party, the KKE, has just told a local radio station that the Papademos government is not only “dangerous” but “murderous”.

Sofianos says:

We have to do everything in our power to stop this agreement with foreign lenders being carried out. These measures are killing Greeks, an entire nation. We won’t let them pass.

One report from the scene reckoned there were around 5,000 people attending the Communist rally.

Earlier, Alexis Tsipras who heads the leftist SYRIZA group, accused Greece’s leaders of “acting out” in a drama that had already been foretold. “They are pretending to negotiate. It’s an absolute mockery. We all know they have already signed up to the deal.”

Tsipras also claimed Athens had been reduced to squabbling over the conditions of the loan package with “second rate employees” from the troika. It should finally bite the bullet and “default” he said.

KKE and SYRIZA are part of a leftist bloc whose popularity has surged in recent months, and are not participating in the interim government.

9.26am: European commissioner Neelie Kroes has caused a stir today by claiming that the eurozone would not be in trouble if Greece quit.

Kroes told Dutch newspaper Volkskrant that the dangers of a Greek exit were being overplayed. She said:

When one member leaves it doesn’t mean ‘man overboard’.

Maybe my choice of words is unfortunate. What is a man overboard? They always said if a country is let go or asks to get out, then the whole edifice will collapse. But that is simply not true.

9.06am: Greek PM Lucas Papademos did make one concession to the Troika in his overnight negotiations – he agreed to cut 15,000 public sector workers by 20 March.

20 March is a real Red Letter day – when Greece must meet €14.5bn in loan repayments. That’s one deadline Athens can’t ignore.

Papademos agreed to the job cuts to show he’s serious about economic reform – but the move is only likely to bolster support for today’s strike action.

8.58am: In Athens, our correspondent Helena Smith reports that it is likely to be another marathon day punctured by talks and negotiations but one that JUST MIGHT finally clinch the agreement that Europe – and markets – are waiting for.

Government officials have told her “there is a deal on the table and in all probability the [political] leaders will accept it”.

One well-placed source said:

The text [outlining the agreement] is expected to be finalised by 4pm. It will be sent to the leaders who will have two hours to read it before meeting the prime minster at 6pm.

Asked if that meeting would be brief, the official told Helena:

It could go on well into the night … the leaders have to come to terms with what they have to accept.

Time really is short. The official explained that the text of Greece’s agreement needs to be agreed tonight, so that political leaders can meet the Troika on Wednesday, allowing finance minister Evangelos Venizelos to present the plan to eurogroup finance ministers on Thursday.

As Helena explains, technocrat prime minister Lucas Papademos worked on the plan into the early hours of this morning.

The nuts and bolts of the agreement laying out the tough conditions under which debt-stricken Greece will receive €130bn in aid – its second rescue package in as many years – were hammered out by Papademos in negotiations that were only wrapped up at 3am this morning.

The talks, said one senior official, focused on the “issue of the financial gap this year” – a budget black hole that amounts to €3.1bn. The governmnent agreed to plug it by shaving supplementary pensions and other benefits in the public sector.

Sources say that the Troika tried to repoen the issue of labour relations – part of its push to improve Greece’s competitiveness – much to the chagrin of Greece’s political parties.

8.47am: Jean-Claude Juncker, who heads the eurogroup of finance ministers, is the first EU leader to hit the headlines today.

Juncker told German radio that “the euro would outlast us all”, and also said he was confident that Greece would remain in the single currency. He also argued that Europe would be forced to spend even more money if Greece were to quit the euro.

“According to the Treaty we cannot kick out the Greeks anyway,” Juncker said, adding:

If we force them out…we would still be forced to support Greece, and would have to invest unimaginable sums. That would be at least as expensive as the virtual costs of the aid credits up to now.

8.29am: We’re expecting Lucas Papademos to hold talks with the leaders of Greece’s three political parties this afternoon. Elsewhere, Ben Bernanke will be testifying to the US Senate – giving his view of the world economy, and America’s recovery from recession.

In the bond markets, Greece is auctioning 6-month bills, with the UK and the US both selling longer-term bonds.

8.19am: European stock markets have opened, but it’s a pretty limp start to trading – with the FTSE 100 dropping just 4 points to 5887.

Traders remain sanguine over the deadlock in Greece; seemingly confident that a deal will be hammered out eventually because the consequences of failure are so great.

As Stan Shamu of IG Markets put it:

Given the catastrophic effects a disorderly default could have on markets, there is an underlying expectation that a deal will be reached.

8.04am: Are you in Greece today? If so, please let us know how the strikes are affecting you – either in the comments below, or by email (I’m on graeme.wearden@guardian.co.uk) or over Twitter (@graemewearden)

7.58am: Today’s strike is expected to cause widespread disruption in Greece – a country used to regular industrial action since the financial crisis began.

Demonstrations are also expected to take place in Athens – raising fears that the strike could turn violent. Many previous protests have begun peacefully, but descended into clashes between riot police and masked protesters.

The strike is expected to force many schools to close today, and disrupt work at local and government offices. There are also reports that hospitals will be forced to operate with limited staff.

Transport links will certainly be disrupted, with bus, rail and metro services in Athens partially suspended.

The strike was called by Greece’s two main union bodies — ADEDY, which represents workers in the public sector, and GSEE which represents private sector employees.

Yannis Panagopoulos, president of GSEE, said the unions have moved beyond negotiation, as further austerity would destroy the Greek economy. Panagopoulos claimed that:

The troika’s demands are the chronicle of a death foretold. This is a brutal cynical blackmail against an entire nation.

Members of the Greek Communist Party held a rally in Athens yesterday. As this picture of Syntagma Square shows, they weren’t deterred by the rainy weather.

7.52am: Good morning, and welcome to today’s rolling coverage of the eurozone debt crisis.

Greek workers are holding a major strike to voice their opposition against the austerity measures that the country must accept in return for its second rescue package, worth €130bn. The walkout will be closely watched, as it will show the depth of public anger against further cutbacks and tax rises.

The strike comes as Greek PM Lucas Papademos prepares to hold talks with the leaders of Greece’s three largest political parties, in yet another attempt to reach agreement over the terms of the €130bn package.